8 Best Banks for Overdrafts 2023 - NerdWallet (2024)

BEST OF

These financial institutions charge low or no overdraft fees and offer overdraft coverage options.

8 Best Banks for Overdrafts 2023 - NerdWallet (1)

By Chanelle Bessette

Edited bySara Clarke

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Overdraft fees are the fees that financial institutions charge consumers who make a transaction that costs more than the available funds in their account. The fees can be $30 or more per occurrence, and some institutions charge that fee multiple times per day if a customer continues to make transactions that overdraft their account. If a customer isn’t vigilant about watching their account balance, they could face more than $100 in fees without realizing they’ve overdrafted.

» Learn more about overdrafts with our guide to overdraft programs and fees

Some institutions have worked to create better overdraft services for customers by reducing or eliminating overdraft fees or by offering free or low-cost overdraft protection. The institutions on this list have created consumer-friendly overdraft policies and have strong overall star ratings for their other products and customer service. See our picks below.

» How does your bank stack up? Compare what banks charge for overdrafts

A note about methodology: The financial institutions on this list all received a 5-star rating on their overdraft services based on NerdWallet’s star-rating process. However, the star ratings listed on this roundup reflect the financial institutions’ checking account star ratings, which include not only overdraft policies but also such factors as monthly fee, interest rates, minimum opening deposits and domestic ATMs. Learn more about star ratings on our methodology page.

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Our pick for

Overdrafts

NerdWallet rating

5.0

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (10)

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at SoFi Bank, N.A., Member FDIC

APY

0.50%

Bonus

$300

Monthly fee

$0

Overdraft star rating

5.0/5

NerdWallet rating

5.0

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (11)

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at Axos Bank®, Member FDIC

APY

3.30%

Bonus

$300

Monthly fee

$0

Overdraft star rating

4.5/5

NerdWallet rating

5.0

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (12)

APY

0.10%

Bonus

N/A

Monthly fee

$0

Overdraft star rating

5.0/5

NerdWallet rating

3.5

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (13)

APY

N/A

Bonus

N/A

Overdraft star rating

5.0/5

NerdWallet rating

4.5

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (14)

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at Chime®, Deposits are FDIC Insured

APY

N/A

Bonus

N/A

Monthly fee

$0

Overdraft star rating

5.0/5

NerdWallet rating

4.5

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (15)

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at Current, Deposits are FDIC Insured

APY

N/A

Bonus

N/A

Monthly fee

$0

Overdraft star rating

5.0/5

NerdWallet rating

4.5

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (16)

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at Varo Bank, Member FDIC

APY

N/A

Bonus

N/A

Monthly fee

$0

Overdraft star rating

5.0/5

NerdWallet rating

4.0

/5

8 Best Banks for Overdrafts 2023 - NerdWallet (17)

APY

0.10%

Bonus

N/A

Monthly fee

$5.00

Overdraft star rating

5.0/5

Last updated on July 11, 2023

Methodology

We took a close look at over 90 financial institutions and financial service providers, including the largest U.S. banks based on assets, internet search traffic and other factors; the nation’s largest credit unions, based on assets and membership; and other notable and/or emerging players in the industry. We rated them on criteria including annual percentage yields, minimum balances, fees, digital experience and more.

Financial institutions and providers surveyed are: Affirm, Alaska USA Federal Credit Union, All America Bank, Alliant Credit Union, Ally Bank, Amalgamated Bank, America First Credit Union, American Express National Bank, Andrews Federal Credit Union, Associated Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Bank7, Barclays, Bask Bank, Bethpage Federal Credit Union, BMO, BMO Alto, Boeing Employees Credit Union, Bread Savings, BrioDirect, Capital One, Charles Schwab Bank, Chase, Chime, CIBC U.S., CIT Bank, Citibank, Citizens, Citizens Bank, City First Bank, Climate First Bank, Commerce Bank, Community First Credit Union of Florida, ConnectOne Bank, Connexus Credit Union, Consumers Credit Union, Current, Delta Community Credit Union, Discover Bank, E*TRADE, Fifth Third Bank, First Foundation, First National Bank, First Republic Bank, First Tech Federal Credit Union, Flagstar Bank, FNBO Direct, GO2bank, Golden 1 Credit Union, Greenwood, Hope Credit Union, Huntington Bank, Industrial Bank, Ivy Bank, KeyBank, Lake Michigan Credit Union, LendingClub Bank, Liberty Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Nationwide (by Axos), Navy Federal Credit Union, NBKC, One, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Regions Bank, Revolut, Salem Five Direct, Sallie Mae Bank, Santander Bank, Scarlet, SchoolsFirst Federal Credit Union, Securityplus Federal Credit Union, Security Service Federal Credit Union, Self-Help Credit Union, Service Credit Union, SoFi, State Employees’ Credit Union of North Carolina, Suncoast Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, Upgrade, USAA Bank, Varo, Vio Bank, Wells Fargo and Zynlo Bank.

To recap our selections...

NerdWallet's Best Banks for Overdrafts 2023

I'm well-versed in finance, particularly in banking services and financial institutions. When it comes to overdraft fees and policies, understanding the nuances of various financial institutions' offerings is crucial. Here's an analysis of the concepts in the provided article:

  1. Overdraft Fees: These are charges imposed by financial institutions when an account holder spends more money than is available in their account. The fees can be substantial, often $30 or more per occurrence, and can accumulate rapidly if multiple transactions overdraft an account.

  2. NerdWallet's Rating System: NerdWallet evaluates financial institutions based on criteria including annual percentage yields (APY), minimum balances, fees, digital experience, and more. Institutions receiving a 5-star rating often offer the best overall services and customer experiences.

  3. Featured Financial Institutions: The article lists several institutions offering low or no overdraft fees, along with additional benefits:

    • SoFi Checking and Savings: Offers overdraft protection options and does not charge overdraft fees.
    • Axos Bank® Rewards Checking: Provides overdraft protection programs and generally doesn't charge overdraft fees.
    • Ally Bank Spending Account: No overdraft fees, offers free overdraft protection transfers.
    • One Spend: Doesn't charge overdraft or nonsufficient fund fees and provides overdraft coverage up to $200.
    • Chime Checking Account: No overdraft fees, offers Chime's SpotMe® program for no-fee overdrafts.
    • Current Account: Doesn't permit overdrafts but offers an Overdrive program allowing a limited overdraft without fees.
    • Varo Bank Account: Doesn't charge overdraft fees and declines transactions that would lead to a negative balance. Also offers a cash advance program.
    • Self-Help Credit Union Personal Checking: Doesn't charge overdraft fees and provides free overdraft protection transfer services.
  4. Overdraft Protection Options: Several institutions offer various forms of overdraft protection, including:

    • Free overdraft protection transfers from linked accounts: Some institutions automatically transfer funds from linked savings or money market accounts to cover overdrafts.
    • Overdraft lines of credit: Offered by some institutions with interest rates or associated fees for covering overdrafts.
  5. Customer Eligibility Criteria: Most institutions have specific criteria for customers to qualify for overdraft coverage, such as maintaining a certain minimum balance, making regular direct deposits, or fulfilling other requirements.

  6. Discretionary Overdraft Payment: Some institutions may occasionally cover overdrafts at their discretion but typically decline transactions unless customers are enrolled in specific overdraft protection programs.

Understanding these nuances helps consumers make informed choices about their banking options and avoid high fees associated with overdrafts. If you have any specific questions about these concepts or need further details, feel free to ask!

8 Best Banks for Overdrafts 2023 - NerdWallet (2024)
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